Israel Corp. details restructuring plan for Zim

Zim has detailed a reorganization plan that will convert much of the company’s debt into shares of the container carrier.
In a filing with the Tel Aviv Stock Exchange and Israel Securities Authority, Zim’s parent company Israel Corp outlined a “term sheet” for a financial restructuring of the container shipping company.
Israel Corp., which owns nearly 100 percent of Zim (a fractional share is held by the Israeli Government), will invest an additional $200 million in Zim in order to retain a 32-percent interest in Zim.
Financial creditors and ship owners will receive approximately 68 percent of the company’s share capital.
The reorganization, which is subject to approval by creditors, would improve the Zim's financial position by converting debt into shares in the company, rescheduling debt, postponing maturity dates, and creating the forgiveness of debt by interested parties.
Approximately half of the company’s financial debt, $1.8 billion, would be deemed to be secured debt, called “Debt A,” and Zim would sign new detailed loan agreements for $907 million that would bear an interest rate of LIBOR plus 2.8 percent. Entities financing ships, whose stake in debt is estimated to be $633 million, are granted an option to purchase ships secured in their favor and lease them back to Zim. If that option is taken, the total of Debt A would be reduced from $907 million to $274 million.
The company believes that the restructuring will make Zim sustainable even if there is not a turnaround in the container industry.